Macroeconomic Report & Economic Updates

Nigeria Economic Update (Issue 12)

The Monetary Policy Committee of the Central Bank of Nigeria (CBN) held the second meeting for the year on the 21st of March, 2022, and voted to retain the Monetary Policy Rate (MPR) at 11.5 percent. The MPC also voted to retain other monetary parameters1. The asymmetric corridor was retained at +100/-700 basis points around the MPR; Cash Reserve Ratio (CRR) was retained at 27.5 percent; the Liquidity Ratio was retained at 30 percent. The Committee acknowledged the rising inflation, which was attributed to supply-side factors including persisting insecurity and scarcity of PMS. As a result, effective collaboration with fiscal authority was highlighted in the meeting as a plausible strategy to tame the rate of increase in the price level. Furthermore, there is a need for the Bank to evaluate existing interventions such as the Anchor Borrowers’, Real Sector Support Facility – Differentiated Cash Reserves Requirement (RSSF-DCRR), and Nigeria Electricity Market Stabilisation Facility, to understand their performance and challenges. This is important because an increase in the disbursement of intervention funds without a corresponding increase in productivity contribute to an increase in the price level.

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